MARKET WRAP 18TH JAN 2016

NIFTY saw another rough day today loosing 1.12% and closing 86 points lower from yesterday.

On the intraday 2 hour chart, we see the descending broadening triangle. It is a descending broadening triangle  because the resistance line is horizontal . Nifty has reached the 7350 support level which was mentioned in the previous market wrap.

Today we saw that the pressure was taken off from the bank stocks, however the infrastructure stocks caved and lost some 3-5%.

Karnataka bank was up by 4% on cues of it result announcement.

The international markets were stable today, Shanghai composite index closed 0.44% higher.  The Europeans indices are slightly lower as we speak.

CHART OF THE DAY

Due to the news of a penalty imposed on Adani Power’s company, Adani-Hazira Port Pvt Ltd (AHPPL) and its associate for forging environment clearance from the Ministry of Environment and Forests, it’s shared tanked 10.36% lower, closing at 26.40 after an opening of 29.40.

On the charts we see a broadening triangle which is often observed as a topping out pattern after a rally. This broadening triangle is different from the one observed previously in Nifty because both the upper and lower trendlines are diverging outward due to the wild swings in prices.

Notice the black rectangles on the chart. These are highlighting the volume observed, against the corresponding price movements.

In rectangle #1, we see that the rally that started from 25, came about with very low volumes, this indicated that the rally does not have strength.

In rectangle #2 , we see that the volume was high in the consolidation phase, this indicates the shifting phase were in the ‘smart investors’ or professionals who have access to better information and resources, shift their holdings to the less smart investors. This was an early indication of the upcoming down move.